Finland seeks early resolution of Nokia’s tax dispute in India

Finland wants the Indian government to actively pursue a resolution of its tax dispute with Finnish telecom company Nokia, so that the company's Chennai plant is allowed to be part of Microsoft's takeover of Nokia's handset business worldwide.

Microsoft has given a deadline of 12 December for Nokia to resolve its tax dispute and free the Chennai plant from all litigations for proceeding with the $7.2 billion deal (See: IT department rejects Nokia's Rs2,250 crore offer against tax liability).

Last month Nokia shareholders had voted strongly in favour of the sale of Nokia's ailing cellphone division along with a portfolio of patents and services to Microsoft (See: Nokia shareholders overwhelmingly approve sale of handset division to Microsoft)

Reports quoting Finland's foreign minister Erkki Tuomioja, meanwhile, said that although his country was not a party to Nokia's tax dispute with Indian authorities, his government was concerned about the outcome of the tax dispute.

Tuomioja said he has been in touch with his Indian counterpart on the matter.

The income tax department had slapped a Rs6,500-crore tax notice on Nokia's Indian subsidiary for violating withholding tax norms since 2006 while the company continued to make royalty payments to its parent company in Finland.

Nokia, meanwhile, tried to settle the issue with a minimum deposit of Rs2,250 crore on condition that its Chennai unit is freed of all obligations and the sale is allowed to proceed smoothly.

The income tax department, however, told the Delhi High Court that the offer of Finnish mobile maker Nokia to deposit Rs 2,250 crore against the company's tax liability of nearly Rs 6,500 crore was not acceptable.

Nokia has appealed to the Delhi High Court for release of its factory. The company pointed out that if the issue was not sorted out by 12 December, it will be forced to keep the Chennai plant out of the deal and the plant may have to eventually close down (See: Nokia-Microsoft deal receives FTC nod).

''I don't know what plan the company has, but in the worst case it could lead to the closing down of Chennai plant which employs 8,000 people and sub-contracts up to 30,000 people. That would not be in anybody's interests,'' reports quoted Tuomioja as saying.

He said he had discussed the issue with the India's ministries of finance and ministry of foreign affairs during his recent visit to the country.

''We are concerned. We have taken up the matter on several other occasions as well. Anyone would want to see a result that would not lead to closing down of a plant that is beneficial to India and has been beneficial to Finland,'' Tuomioja said.

The court has listed the matter for 9 December.

Nokia's Chennai plant is one of its biggest facilities.